FORECLOSURES UP 18% IN STATE : CHANGE UNLIKELY UNTIL RESALE PRICES IMPROVE.

Byline: Gregory J. Wilcox Daily News Staff Writer

Foreclosures by lenders rose 18 percent in California during the third quarter from the 1995 period and are not likely to slacken until resale prices firm up, a real estate market research firm said Thursday.

In July through September, default notices were sent to 39,039 homeowners statewide compared with 32,945 in the third quarter last year, according to a survey by DataQuick Information Systems of La Jolla.

Foreclosure activity remained flat on a month-to-month basis. And the total was well below the all-time quarterly high of 44,686 recorded in the first three months of this year.

In Southern California, new foreclosure actions rose nearly 16 percent compared with the 1995 third quarter. Los Angeles and Ventura counties registered increases of more than 23 percent.

``One of the hard realities of the current marketplace is that foreclosures continue to be a significant aspect of the local market.

And as long as there is a (big) number of foreclosures available, it is going to keep downward pressure on prices,'' said Jim Link, executive vice president of the San Fernando Valley Association of Realtors.

Foreclosure notices are a lagging indicator, meaning that they reflect economic distress of about 18 months ago.

It will take time for these properties to work their way out of the market.

``Foreclosures will be with us until home prices go up another 2 or 3 percent,'' said Donald L. Cohn, DataQuick's chief executive officer.

The third quarter brought modest price gains.

The median price, the point at which half the homes sold for more and half for less, was $168,000, up 1.2 percent from a year ago.

DataQuick market analyst John Karevoll said that Southern California prices should increase 2 percent by this spring.

Meantime, Karevoll said, ``There are an awful lot of marginally at-risk homeowners. With a couple of percent increase in prices, the majority of these people would be lifted out of that situation.''

A default notice is the first step of the formal foreclosure process, which can take four months or longer.

During that time, many homeowners catch up on their mortgage payments, deed the property to the lender or sell their home and pay off the mortgage before the foreclosure process is completed.

Foreclosure activity jumped during the year's first quarter after the owners of home loans, such as the Federal National Mortgage Association, told banks and other institutions to move more quickly to clear their books.

In some cases default notices had not been issued until property owners were nine months behind in their payments. Now notices are being sent when payments are six months late.

``You don't need to jump on the homeowner right away. You do want to work things out. But at some point you need to move on the loan to get it off the books, and (lenders) were waiting too long,'' Karevoll said.

FORECLOSURES

Southland homes going into foreclosure:

County 3rd qtr.'95 2nd qtr. '96 3rd qtr. '96 % chng. from '95

Los Angeles 10,084 13,132 12,480 23.8%

Orange 2,808 3,334 3,123 11.2%

San Diego  2,356 2,842 2,722 15.5%

Riverside 3,0883,383 3,267 5.8%

San Bernardino  3,540 3,406 3,719 5.1%

Ventura 589 838 728 23.7%

So.Calif. total 22,464 26,935 26,039 15.9%

CAPTION(S):

Chart

Chart: (Color) FORECLOSURES (See text)